This week, the crypto market is gearing up for an information-rich week, as a number of key U.S. economic indicators are expected to shape Fed policy expectations. Bitcoin and other risk assets may see more volatile movement as investors evaluate inflation, economic growth and labor market conditions.
Key Economic Events This Week
The main attention will be on the Personal Consumption Expenditures (PCE) price index for July, which is released on Wednesday. The preferred inflation measure of the Federal Reserve is PCE. The headline measure is projected to be 0.1% higher month-on-month following a 0.1% decline in June.
Meanwhile, the annual rate is projected to be 3.6% compared with 3.7%. The figures for the Core PCE (excluding the food and energy prices) are projected to rise by 0.2% from the prior month. The annual reading is forecast to be 3.3%.
The inflation data will be carefully considered before the Fed’s September meeting. June PCE inflation was at 3.7% and core PCE was 3.3%. Both are still above the central bank’s 2% inflation target. A higher than desired reading in July may further support the expectations that interest rates will stay higher. A more benign print might bolster anticipation for easier policy.
Another big indicator will be GDP growth. The latest projections call for 1.5 per cent annualised expansion in the second quarter. This is up from 2.1% growth in the first quarter. A new GDP report will also be released Wednesday.
Labor will stay in the spotlight on Thursday as weekly new claims for unemployment benefits are released. Initial claims for the week ending Aug. 22 are forecast to remain steady at 206,000, the same amount as last week. The figure will provide a further pointer as to the state of employment conditions.
Potential Impact On The Crypto Market
The crypto market will also be reading the remarks by Fed Chair Kevin Warsh at the Jackson Hole symposium. His remarks may give more clues on the outlook for inflation and the economy by policymakers. The speech is coming out alongside key data from the US, including the PCE, and will serve as a significant talking point for interest rates.
In the case of crypto, the data may impact lending rates, liquidity, and risk appetite. Bitcoin is trending up considerably recently and that’s why economic data is important for price action.
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